Chip production at Samsung at risk: Workers announce general strike

As union members at Samsung Electronics prepare to go on strike starting next week, concerns are growing about the potential impact of their walkout on production at the world’s largest memory chip maker.

Analysts expect the strike, which is initially scheduled to last three days, to have no major impact on chip production, as the chipmaker’s production is largely automated.

However, this could change depending on how many employees at Samsung’s chip factories take part in the strike – and for how long.

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“Chip production cannot continue without replacement workers,” said Kim Yang-Paeng, senior researcher at the Korea Institute for Industrial Economics and Trade.

Operating Samsung’s automated machines requires “expertise and expertise,” Kim said, pointing to the risks if the workers operating Samsung’s machines go on strike for an extended period of time.

When announcing the strike on Tuesday, Samsung’s union leader said they were prepared to strike until the company’s demands for better pay and time off were met.

“We are calling a general strike today,” said Son Woo-mok, president of the National Samsung Electronics Union (NSEU), in a live broadcast on YouTube. “Until our demands are met, we will continue to fight with the ‘No Pay, No Work’ general strike.”

Union officials later said the group had called for a strike from July 8 to 10.

The purpose of the strike is to disrupt production, said Lee Hyun-kuk, vice president of the NSEU, in a live broadcast on YouTube.

The union could consider another strike attempt if its demands are not heard by the company, he added.

AI Chip Racing

The NSEU said on Tuesday that it had not yet decided how many workers would join the strike planned for next week. The union’s roughly 28,000 members make up more than a fifth of Samsung’s workforce.

“This planned strike marks a turning point in Samsung’s history of non-union management. This could be seen as a decline in employee loyalty at Samsung… caused by disappointing wages and compensation compared to Samsung’s competitors,” said a Seoul-based analyst.

Any industrial dispute of a larger scale or duration would cause headaches for Samsung.

Despite some successes, the chipmaker is facing challenges in some areas, including the production of some cutting-edge chips. It recently replaced the head of its semiconductor division in an effort to deal with the “crisis” affecting the industry.

A major challenge for Samsung is to catch up with competitors that produce high-bandwidth memory (HBM) chips for AI applications.

Samsung’s HBM chips have yet to pass Nvidia’s tests for use in the US company’s AI processors due to issues with heat generation and power consumption. Nvidia controls about 80% of the global market for graphics processing units (GPU) for AI applications.

Analysts say passing these tests would be a critical milestone for Samsung, both in terms of its reputation and earnings momentum.

The chipmaker is also trying to close its gap in contract chip manufacturing with Taiwan’s TSMC.

“Equal partner”

Samsung is South Korea’s largest conglomerate in terms of sales, but in recent years there have been repeated disputes with the chip manufacturer’s workers over wages and other labor laws.

With their strike this month, union members are demanding that the company introduce a more transparent bonus and time off system, as well as an additional day of vacation.

NSEU’s Son said the union wanted to be treated as an equal partner by the company.

The union’s planned strike comes just over a month after it held the first workers’ meeting in the conglomerate’s 55-year history. stop working for a day to demand better pay.

Samsung stated at the time that there was no impact on production or business operations.

Meanwhile, the chip manufacturer has commented on the strike planned for next week. The share price closed barely changed, while the leading index fell by 0.8 percent.

• Reuters, with additional editing by Vishakha Saxena

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Vishakha Saxena

Vishakha Saxena is a multimedia and social media editor at Asia Financial. She has been working as a digital journalist since 2013 and is an experienced writer and multimedia producer. As a trader and investor, she has a keen interest in the new economy, emerging markets and the intersection of finance and society. You can write to her at (email protected).